Newcastle Bunnings sells on huge yield

Bunnings Warehouse-leased properties have been few and far between on the commercial market this year, and are among the industry’s hottest commodities when they do arise.

And yet a Bunnings-anchored homemaker centre at Heatherbrae, near Newcastle, has sold on a soaring yield of almost 8% – significantly higher than the sub-5% yields most Bunnings trade for.

Sentinel Property Group secured the property for its Sentinel (Open Ended) Homemaker Trust, paying $23.3 million for the 4.57ha site, which has a lettable area of 17,181sqm.

Bunnings took over the main tenancy last year from defunct former hardware rival Masters, and now occupies 77% of the site, while generating two thirds of its income.

Other tenants in the complex include PETstock and BCF.

While Bunnings leases are highly sought after, the homemaker centre has a weighted average lease expiry of only 3.65 years, which was likely a factor in the larger yield. The Pacific Highway property draws an annual income of almost $1.85 million.

The sale marks Sentinel’s third acquisition in New South Wales’ Hunter region, following its purchase of an industrial facility at Mayfield and an office building on Argyle St in the Newcastle CBD.

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